USA: Recession Will Hit Workers & Poor Hardest

Almost overnight, the media, corporate CEOs and government officials
have gone from proclaiming that the U.S. would somehow avoid an
economic slump, to all but recognizing that the country has probably
already entered a recession. They are simply acknowledging what
millions of workers have known for months and even years: the economy
is in trouble, and working people and the poor are being hit hard.

Almost overnight, the media, corporate CEOs and government officials
have gone from proclaiming that the U.S. would somehow avoid an
economic slump, to all but recognizing that the country has probably
already entered a recession. They are simply acknowledging what
millions of workers have known for months and even years: the economy
is in trouble, and working people and the poor are being hit hard.

Incredibly,
we are told by some pundits that there is nothing to worry about, that
it is all part of the “natural cycle” of the system, that less spending
on dining and entertainment will lead to a healthier population that
eats less and exercises more, that expensive gasoline leads to fewer
cars on the road and therefore to less pollution, and so on. Yes, it is
indeed part of the “natural cycle” of capitalism, and yes, belts will
need to be tightened.

But for some, the “natural cycle” will mean
a lot more pain than for others. While some CEOs may need to purchase
one less corporate jet this year, millions of workers and poor people
will have to choose between buying food, gasoline, heating, medicine,
education and keeping a roof over their heads. Merrill Lynch has
reported that by the end of 2007, 36 percent of Americans’ “disposable
income” went to cover food, energy, medicine and health care, the
highest proportion since records began in 1960.

The
stock market has taken a beating, as investors realize that the
trillions of dollars in fictitious money they have been trading back
and forth has little of substance behind it. The dollar has sunk to new
lows, oil and gold have risen to new highs, with both food and gasoline
prices rising fast. Bear Stearns, once a top-five U.S. investment bank,
collapsed in a single day, surviving only due to an emergency buyout by
rival JP Morgan Chase for just $2 per share. Less than a year ago it
was worth over $158 per share.

The Philadephia Fed index on
manufacturing fell to -24.0 in February, from -20.9 in January, a
further contraction of the sector. The reading for New York was
similarly grim, registering its steepest drop on record. There is a
very real danger of stagflation: rising inflation combined with rising
unemployment and slow growth or contraction.

The months-long
crisis in the housing market has now definitely spread to other sectors
of the economy. Home prices have collapsed in many markets, and many
borrowers now owe more than their houses are worth. Hundreds of
thousands of households are defaulting on their mortgage loans even
before the rates reset to a higher level, with twice as many defaults
in 2007 than in 2006. The media has even reported cases of people
resorting to arson to avoid foreclosure and bankruptcy.
To make ends
meet, many workers have had to resort to “pay day” loans at exorbitant
rates as high as 800 percent. The Center for Responsible Lending (CRL)
recently reported that the average borrower has to pay a total of $793
for a $325 loan. Far from helping people, these predatory lenders
succeed only in digging a deeper hole for workers already on the brink
of financial disaster.

The loss of millions of quality unionized
jobs over the last 30 years means that those with less education are
more vulnerable to the effects of a recession than ever. In the past,
even many people who didn’t finish high school could make a decent
enough life for themselves and their families by learning a trade or
working at a factory. These days, even college graduates with
specialized training are more and more likely to find themselves
working at a low wage, dead-end service job.

A “good job” is
defined by the Center for Economic and Policy Research (CEPR) as one
that provides health insurance, a retirement plan and earnings of at
least $17 per hour, or about $34,000 per year. In 1979 there were 19.6
million such jobs in the manufacturing sector, the peak of U.S.
manufacturing. Since then, nearly 6 million such jobs have been lost,
with another 52,000 down the drain in February alone. 30 years ago, one
in five high school graduates had a “good job”, by 2005 it was one in
seven. According to the CEPR, in 1979, 41 percent of those who didn’t
finish high school had “bad jobs”, that is, jobs without health or
retirement plans paying less than $16.50 an hour. By 2005, that figure
had reached 61 percent.

As the economic crisis worsens, those who
lose their jobs will find it even harder to find new employment, and
without savings, unable to keep up with mortgage payments, and a gutted
social safety net, millions of people will be “out of luck”. Those that
do find work will likely have to take major pay and benefits cuts. Many
young people and even some not so young have been compelled to move
back to their parents’ homes to try and regroup financially and avoid
homelessness.

One
sector of the economy that remains highly profitable is the so-called
“defense” industry. The CEO of Lockheed Martin made nearly $25 million
last year. Compare that with the average wage earned by a private in
the Army: $25,000. Unable to find work or educational opportunities in
the private sector, thousands of working class youth are sucked into
the military in an “economic draft”.

Over 4,000 U.S. soldiers and
countless Iraqis have died, and the billions of dollars spent on this
tragic adventure of imperialism have meant a steady decline in U.S.
workers’ standard of living. Bush’s approval rating has sunk to a new
low of just 31 percent, forty points lower than it was five years ago
when he launched the invasion. This is a decline similar to Lyndon
Johnson’s in the late 1960s during the Vietnam War. And still the
occupation of Iraq continues, a full 16 months after the Democrats were
swept into congressional power with a mandate to end the war. Not one
of the Republican or Democratic presidential candidates has a plan to
immediately pull all the troops out.

It is in this situation that
workers are being asked to vote for either Barack Obama or Hillary
Clinton to bring about “change”. There is even talk of a “Dream Ticket”
with both candidates on the ballot. This is more than enough proof that
there are no fundamental differences between them. At root, they both
defend the status quo, albeit with this or that cosmetic change. This
is why working people need a party of our own. And not only for those
born in the U.S., but for all workers.

On May 1st, workers across
the country will march for immigrants’ rights. The magnificent mass
movement that erupted two years ago has largely been driven underground
by a wave of state terror, with tens of thousands being rounded up in
raids and deportations. But nothing fundamental has been resolved.
Sooner or later, the mass struggle will erupt again, on an even higher
level, as the economic crisis forces all workers to come together to
defend their common class interests. In the meantime, the scapegoating
of immigrant workers for the problems caused by the system itself has
increased exponentially. The labor movement must denounce these attacks
and stand shoulder to shoulder with our working class brothers and
sisters. Contact the WIL to join the struggle for a better world for
all workers.